What does ACH stand for in the context of electronic payments?

ACH stands for Automated Clearing House, which is a financial network that facilitates electronic payments and money transfers between bank accounts in the United States. This system is widely used for various types of transactions, including direct deposits of payroll, consumer payments, and bank-to-bank transfers.

The Automated Clearing House allows for efficient processing of large volumes of transactions, contributing to the modernization and efficiency of payment systems. This network operates under the governance of Nacha (the National Automated Clearing House Association), which sets the rules and standards necessary for its operation.

Understanding the role of ACH is crucial in the context of electronic payments, as it provides the backbone for many payment types utilized by individuals and businesses alike, enhancing operational efficiency and allowing for quicker settlement times compared to traditional payment methods.